The Pentagon has taken an important first step by canceling the contract for
Halliburton's military logistics contract in Iraq and putting it up for
open bid. Halliburton has only itself to blame for shoddy managment,
over-charging and thumbing its nose at military investigators. In our
three alternative annual reports on Halliburton, CorpWatch has
uncovered innumerable cases of incompetence and corruption: for example
torching brand-new $85,000 Mercedes trucks and charging $100 for a bag
of laundry.

U.S. taxpayers have paid Halliburton some $20 billion for such work supporting the administration's "war on terrorism" over the last five years. At the end of the day, they have been cheated out of hundreds of millions of dollars in unsupported costs and overcharges that the military auditors have disputed, but that the Pentagon has paid anyway. If the administration's sudden change of heart is really about fiscal responsibility, it should demand that money back.

We've been following Halliburton's contracts for years. To learn more, check out our three Alternative Annual Reports.

Today Halliburton has completed the major tasks for which it was hired, primarily building of five major military bases in Iraq. Its other duties (aside from oil field contracts) consist mainly of being butler and maid to the occupation forces, including feeding the troops, keeping the bases clean, and providing everything from haircuts to well-stocked PXs. But this latter responsibility offers only a three percent rate of return. Halliburton itself was already questioning whether it wanted the job anymore. At the company's last annual meeting in May, Halliburton's chief financial officer, Christopher Gaut, showed shareholders a PowerPoint which illustrated that the oil and gas business was far more profitable, and booming to boot.

Halliburton's real role was not making money in Iraq, it was overseeing a vast army of minimum-wage Third World labor from countries such as India and the Philippines, who did the jobs that no American wanted to do, including digging latrines and cleaning them, doing soldiers' laundry in an active war zone. The real question for the Pentagon today is whether these practices will continue under new management? Halliburton created the system by which the war is maintained in Iraq, collected its cut, and made a (not-so-graceful) exit. It would be foolish to hope that the companies (and they will be several) who take over can hope to be any more competent, ethical or efficient, although perhaps it is enough to hope that they might be slightly less corrupt.

Now that Halliburton is gone, what do we tell the Iraqis, who had been promised that Halliburton would fix their oil fields so that they could earn a living? Army estimates suggest that Halliburton did such a poor job that the resulting mess will cost Iraq $8 billion a year in lost production. To the credit of the military, Halliburton's role in the Restore Iraqi Oil project in the northern part of Iraq , was canceled also, but only after the Iraqi people paid billions for the botched job.

There is another project that Halliburton has failed to complete: the installation of metering systems at ports in southern Iraq to make sure that crude oil is no longer being smuggled out of the country. Will they complete that simple job, now years overdue, before they skip town?

The United States could prove its resolve to help the people of Iraq by going beyond canceling obviously bad contracts and demanding the money back. With that money, we might provide the Iraqi people the real means to self-sufficiency and peace: working schools, hospitals and functioning oil fields which would provide the country much-needed revenue.

Listen to an interview with CorpWatch's director, Pratap Chatterjee, about the cancelation of Halliburton's once exclusive contract on CorpWatch Radio.